Smuggling to Iran rife in dangerous Gulf waters

KHASAB, Oman (Reuters) - Smugglers pile boxes high on their speedboats, covering them with tarpaulin before zipping off into the sunset on the short but dangerous journey across the strategic Strait of Hormuz from Oman to Iran.

Smugglers from Iran are seen after their arrival at the port of Khasab, in Oman's isolated northern peninsula of Musandam April 30, 2008. Trade with Iran is as ancient as the settlements overlooking the Strait of Hormuz, gateway for a third of the world's oil shipments. In 2005, Iran's police chief said some $6 billion worth of goods were smuggled into the country each year from the Gulf. Smugglers at Musandam say they sometimes bring in fuel, prawns or livestock from Iran, but the trade mostly highlights the way consumer goods, especially U.S. embargoed products like computers, enter the Islamic Republic via Gulf states. REUTERS/Ahmed Jadallah

They return in the early morning, their empty fiberglass boats ready to pick up more cargo at the small Gulf port of Khasab, in Oman’s isolated northern peninsula of Musandam.

Trade with Iran is as ancient as the settlements overlooking the Strait of Hormuz, gateway for a third of the world’s oil shipments. In 2005, Iran’s police chief said some $6 billion worth of goods such as computer parts, tea or cigarettes were smuggled into the country each year from the Gulf.

Now, tensions between the United States and the Islamic Republic have added new dangers to the age-old journey across the Strait of Hormuz.

The arrival of a second U.S. aircraft carrier in the Gulf in April raised fears that Washington was planning to strike Iran.

The U.S. military dismissed this idea but accuses Tehran of supporting Iraqi militias and the Taliban in Afghanistan. Washington also says Iran is seeking nuclear weapons under cover of an energy program though Tehran rejects the charges.

The tension bubbles through the Gulf: this year, four encounters between patrolling U.S. ships and small boats, some described as Iranian by the Pentagon, exposed new risks of confrontation in the busy sea lanes.

But despite the dangers, smugglers on the Khasab route — used to circumventing Iranian import controls, high duties and bureaucracy at overstretched ports — say the money is too good to resist, especially given poor job prospects in Iran.

“The goods come from Dubai and we carry (them) illegally to Iran. The government of Iran does not know about us,” said Ahmed, who has been making the daily journey to Iran’s Qeshm island, some 40 km (25 miles) away, for three years.

“I am a driver. The boat is not mine. For each time, we get (300,000 rials). We go each day 2-3 times. The boss is in Iran,” says Ahmed, who is from Afghanistan but lives in Iran.

TIRES AND NAPPIES

Smugglers say Iranian patrols take a million rials ($110) a boat to turn a blind eye to cargoes ranging from Chinese shoes, to soft drinks, cigarettes, televisions, even hair removal wax.

Those who have failed to grease the right palms, or come across a zealous Iranian guard, often come under fire, forcing them to jettison their illicit cargo to avoid fines and jail.

In Oman, the exports go through the local customs house and the sultanate is even planning to build a free trade zone next to Khasab port as part of its efforts to diversify its economy away from oil.

Iranian officials say Iran’s long sea and land borders make it hard to curb smuggling, but they are more worried about drugs coming in via Afghanistan and state-subsidized fuel going out.

Smugglers at Musandam say they sometimes bring in fuel, prawns or livestock from Iran, but the trade mostly highlights the way consumer goods — especially U.S. embargoed products like computers — enter the Islamic Republic via Gulf states.

The United States cut diplomatic ties with Iran and imposed trade restrictions after the Islamic revolution overthrew the U.S.-allied monarchy in 1979. Leading a drive to isolate Iran, Washington has tightened trade restrictions in recent months.

The United Nations Security Council has also imposed several rounds of sanctions on Iran for its nuclear program.

All that has had little impact on Khasab, where the re-export trade is a major money-spinner in a small economy.

The old market of Khasab is known as the “Iranian souq,” so dominated is it by import and export businesses dedicated to the re-export trade with Iran.

Many of the goods that end up on the smugglers’ boats are imported from the neighboring United Arab Emirates, which does its own roaring re-export trade with Iran. Dubai registered over $4 billion worth of non-oil re-export trade with Iran in 2006.

Tires and babies’ nappies are piled up in the part of Khasab port used by the Iranian boatmen, with a constant stream of pickup trucks ferrying goods onto the jetty.

“We take juice, tea or cigarettes every day,” said one Omani taxi driver who was dropping off a consignment of soft drinks.

TENSE TIMES

Wiry, suntanned men from Afghanistan or Baluchis from Iran man over 70 boats moored in Khasab. The boats leave in groups of five or six, with two men to a vessel. Their aim is to get across the Gulf as fast as possible.

It takes less than 50 minutes to get to Qeshm island. A round to trip to the mainland takes under three hours, even in slower speedboats, the smugglers say.

But with so many vessels in the Gulf, through which 17 million barrels of oil pass each day, and with political tensions so high, any incident could quickly escalate.

The U.S. Fifth Fleet is based on the Gulf island of Bahrain. Eight countries are situated on the Gulf coast, their police, military and coastguard all crowding a busy commercial channel.

In January, the United States said five Iranian speedboats aggressively approached three U.S. Navy ships in the Gulf, and a radio message was received warning they could explode.

Iran said its boats were trying to identify the ships. Experts say the message may have come from a radio heckler known as “the Filipino monkey.”

The smugglers leaving Khasab carry no radios. Most speak no English or Arabic anyway. If anything is curbing their trade, they say, it is economics rather than geopolitics.

Inflation in the UAE and beyond has eroded profits and the global rise in food prices is also pinching.

Of three trucks that once sold tea, snacks and toiletries to the smugglers in Khasab, one remains. The other two are boarded up, having been priced out of business by inflation.

“Before, there were many Iranians. Now, it is less,” said Jaafar Zelabzi, an Indian who runs the still-open truck and accepts Iranian currency. “Prices in the UAE are too high.”